Sales at previously existing stores in China fell 13%, the Wall Street Journal reports, worse than expected. The stock, however, is holding up fairly well, all things considered. Yum’s shares are down just 0.3% at $66.58 at 9:47 am. One possible reason for the lack of a bloodbath: Yum’s stock may already reflect the hit from bird flu, after dropping 7.2% this month.

Analysts aren’t rushing out to recommend the stock, however. Cowen & Co., for instance, tells investors to hold off on purchasing Yum until results out of China show signs of stabilization, while Oppenheimer expects “significant earnings volatility going forward,” although they do recommend buying shares on weakness.

JPMorgan sounds particularly disappointed. “…we thought aggressive advertising would allow March to be modestly better than the result reported,” its analysts wrote in a report today. And they expect a bigger hit in April:

The past several days (not in reported March results) have seen an increasing volume in news around the H7N9 avian flu virus, which has now led to 33 reported infections, 9 deaths, and over 100,000 culled birds. Even though history has consistently shown that eating properly cooked chicken (and to our knowledge handling raw processed chicken) has no human health risk, Chinese consumers have instead pulled back chicken and KFC consumption. This is not in March results but we believe will be in April. Therefore, we are lowering our 2Q comp estimate from -7.5% to -16% including -20% in April…

If it were only Wal-Mart and Apple, it would be easy to brush them off as the missteps of a couple overconfident management teams. But both follow on the problems of other companies, including Google (GOOG), Coca-Cola (KO), Novartis (NVS) and Yum! Brands (YUM), among others, which targeted growth in emerging markets and found headaches as well.

As Heard on the Street’s Tom Orlick writes in his article on Apple’s apology:

For global consumer firms, an ambitious strategy to tap China’s consumer wallet is essential. But given the state media’s penchant for attacking big foreign brands, and the government’s desire to promote its own national champions, a strong Chinese growth story can be a weakness as well as a strength.

These problems rarely crop up in the developed world. In the U.S. there are rules, but for the most part they’re easy enough to figure out (though, don’t tell that to healthcare stocks pre-Patient Protection and Affordable Care Act or bank stocks, which are still trying to figure out what regulation will look like). And in Europe, the regulations might be heavy handed, but at least companies know what the rules are.

That’s not entirely the case in emerging markets. Rules have a way of changing in surprising ways and at unexpected times. For companies that get a big slice of their sales from these countries, that has the potential to turn fast growth into a big problem. I’m sure Coke had no idea they were asking for trouble when they used GPS to determine the best routes for their trucks in China.

Such companies haven’t been producing world-beating returns this year. A basket of 50 European stocks with revenue exposure to China tracked by Morgan Stanley has lost 0.3% this year, while the MSCI Europe has gained 4.9%. A similar basket of 35 U.S. companies with revenues in China has gained 9.7%, compared to the S&P 500′s 10.3% gain.

And in a properly constructed portfolio, investors would have that exposure anyway. If you own the S&P 500, for instance, you already have Wal-Mart, Google, Coke and Apple in your portfolios. And if you have exposure to the MSCI EAFE, you own companies like Nestle and Unilever.

Better to just buy a 5% to 15% stake in an emerging-market exchange-traded fund like the iShares MSCI Emerging Markets Index ETF (EEM) or Vanguard FTSE Emerging Markets (VWO), and let the rest take care of itself.

McDonald’s (MCD) reported sales at existing stores fell 1.5% in February, the company said today, better than the 1.6% drop forecasts by economists. Shares of McDonald’s have jumped 1.3% to $98.39 today.

Sales in the in the Asia/Pacific, Middle East and Africa region fell 1.6%–still better than analyst forecasts for a 1.69% decline–and those sales rose 1.5% exuding a “negative calendar shift due to the leap year.” Weakness in Japan was offset by positive results in China, according to the press release. According to Bloomberg, McDonald’s plans to have 2,000 locations in China by the end of 2013, still well below the 5,200 restaurants operated by competitor Yum! Brands (YUM).

Yum, which is attempting to rebuild its KFC brand in China after antibiotics made their way into its chicken, has gained 1.2% today to $68.06. McDonald’s has returned 11% this year through yesterday’s close, to Yum’s 1.8% gain.

In a press release today, the company said it would take a 5 cent hit to EPS during the January-to-March quarter of 2013, and 2 cents per share spread out over the balance of 2013. Merck now expects first quarter EPS to be between 76 cents and 78 cents a share, below analyst estimates for 86 cents according to FactSet. Merck also said it doesn’t expect the devaluation to hit the companies full year GAAP numbers or EPS ranges.

ISI Group’s Mark Schoenebaum said in a note today that he sees this as a “one-time event and, while unfortunate, not central to the investment case.”

In 2012, China–once the juice that fueled Nike‘s (NKE) share price–had become an impediment to the company’s share price. No longer, say analysts at JPMorgan.

Analysts Matthew Boss, Anne McCormick and Michael Joyce upgraded Nike to an overweight from neutral today, calling the stock a “a multi-year core portfolio holding.” One of the big reasons for the upgrade: China is much less of a problem. The analysts write:

While China…has been NKE’s Achilles heel over the past year (macro, excess inventory in the channel, fit/color issues), management’s turnaround game-plan appears firmly on track…with stabilization targeted over the next 2-3 quarters and a FY14 return to growth likely in our view.

While we are not modeling a turn overnight, management is pleased with initial progress citing +10% DTC sales and wholesale same-store-sales turning positive in 2Q as a potential leading indicator of encouraging trends to come.

Combine that with a “robust product pipeline” and a “laser focus on total shareholder return,” and the stock should hit $64, the analysts say.

Nike has gained 0.8% today to $55.01 and has jumped 19% during the past three months.

About Emerging Markets Daily

Emerging markets have been synonymous with growth, but the outlook for individual nations is constantly changing. Countries from Brazil and Russia to Turkey face challenges including infrastructure bottlenecks, credit issues and political shifts. The Barrons.com Emerging Markets Daily blog analyzes news, data and research out of emerging markets beyond Asia to help readers navigate the investment landscape.

Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools.